Fonterra has begun a consultation process concerning a plan to build two new high-efficiency milk powder driers at its Studholme site in South Canterbury, New Zealand.

The consultation is the first step in applying for a permit with the local district council.

The proposed investment would bring a significant boost to milk processing in one of the country's fastest growing dairy regions and add around nine million litres in processing capacity to keep pace with rising milk volumes.

Once construction of the driers is approved, the project will be implemented by phases. Work on the first drier could begin within the next five years. The second drier could be installed within the next 10 years.

Minimizing environmental impacts is a high priority, with plans including a range of wastewater treatment options with particular attention given to the nearby Wainono lagoon. Fonterra is also looking to minimise the use of coal, and is mulling over options for energy efficient boilers capable of burning biomass.

According to Fonterra's managing director of global operations, Robert Spurway, the expansion would play an important role in delivering the cooperative's growth strategy while also benefiting the local economy and providing employment.

"With the steady increase in milk production, a strong schedule of capital investment in processing and manufacturing will be key to delivering on our V3 strategy - driving value, volume and velocity", Spurway said. "Should it go ahead, the investment at Studholme will bring much needed processing capacity to the South Island as well as optionality to make the products that bring the greatest returns to our shareholders."

Spurway that for each new drier built, about 125 additional jobs are created.